Good news for Republicans who want to legalize marijuana: Taxing pot is A-OK with Grover Norquist, the keeper of the antitax pledge that hundreds of GOP lawmakers have signed.
Last month, Norquist joined Reps. Earl Blumenauer, D-Ore., and Dana Rohrabacher, R-Calif., two of Congress’s most outspoken drug-policy reformers, to push a plan that would allow marijuana-related businesses to write off their business expenses. The federal tax code considers state-approved dispensaries drug traffickers, even in the 20-plus states that have medical marijuana or full legalization. Norquist, Blumenauer, and Rohrabacher want to put an end to that.
But it raises a question: Would legalizing and taxing marijuana violate the pledge not to raise taxes?
After all, the Americans for Tax Reform pledge states, “I will oppose and vote against any and all efforts to increase taxes.” States that have already moved to legalize marijuana, such as Washington and Colorado, plan to levy steep excise taxes on the drug.
But Norquist tells National Journal that lawmakers who signed the pledge and want to legalize and tax cannabis are in the clear. “That’s not a tax increase. It’s legalizing an activity and having the traditional tax applied to it,” he says.
He compares legalization to changes in alcohol regulation, as when a state legalizes the sale of liquor on Sundays or allows grocery stores to sell beer and wine where they previously couldn’t.
“When you legalize something and more people do more of it, and the government gets more revenue because there’s more of it … that’s not a tax increase,” he explains. “The tax goes from 100 percent, meaning it’s illegal, to whatever the tax is.”
At 25 percent on three levels of sales (on top of the state’s standard sales tax of 8.75 percent), Washington’s marijuana tax is significantly higher than its levy on alcohol, but it’s all the “same zone,” says Norquist.
A new Gallup Poll out this week found that a record 58 percent of Americans favor legalization. The potential budgetary windfall has been enough to convince some libertarian-leaning Republicans like Rohrabacher to support what has traditionally been a liberal issue. If the experiments in Colorado and Washington work out, expect to see plenty of other states following in their wake. And now, thanks to Norquist, there’s one less obstacle.